At the turn of the 21st century, it appeared that a new age was dawning for more sustainable transportation. The 1990s saw European countries such as the United Kingdom passing legislation focused on reducing transportation emissions – like the 1993 Clean Air Act, which imposed requirements on the specific motor fuel composition. Later in the decade, the first mass-produced hybrid electric car – the Toyota Prius – was released in 1997 in Japan and would enter the European market three years later. The demand for electric vehicles has since skyrocketed, thanks in significant part to generous government incentives, such as Austria’s tax exemptions, which began in 2022. However, not every government has adopted these incentives, and some are beginning to reduce or remove those that were offered in previous years. France, for example, which used to offer a €3000 purchase incentive for corporate electric vehicles, has now withdrawn the offer. With government incentives and subsidies for more sustainable private vehicles appearing to dry up, how have car manufacturers begun incentivising electric vehicle purchases?
One car manufacturer that has commented on the reduction in government subsidies and incentives regarding the electric vehicle market is Hyundai, which attributes a slowed-down electric vehicle market to a reduction in government assistance schemes. However, Hyundai has not simply allowed its sales of electric vehicles and hybrid cars to dry up. Instead, the Korean auto giant is rolling out a variety of incentives to encourage buyers to consider electric vehicles as an option. In January, Hyundai announced that three of its electric car models, which could not qualify for the Inflation Reduction Act (that offered a $7500 subsidy for electric vehicles), would offer a $7500 cash incentive through to the end of the month. American buyers of the 2025 IONIQ 5 N model have also been provided a $450 charging credit for their vehicle, or a 240 V level 2 home charger included in the purchase price.
Another manufacturer that has adopted private incentives on their electric vehicles is Audi – which offers a range of incentives for their electric models. Between the 8th and 31st of July, purchasers of a new electric Audi can receive £750 off their new car. Additionally, the Audi range of e-tron models offers deposit contributions between £1500 and £17500. Another incentive Audi has offered purchasers of any vehicle from the e-tron range is a free home EV charger, with installation also included. Purchasers who already have a home electric charger can instead receive £500 worth of charging or the same amount deducted from the price of the car. Aside from incentives for electric vehicles, Audi’s partnership with OVO energy also offers new electric vehicle purchasers who switch to OVO a free 10,000 miles, with an additional 1000 miles for the next three years.
Another company that seems to focus on offering its own incentives to buyers considering purchasing an electric vehicle is BMW. In the UK, BMW provides a unique service in their offer of an APR of 7.9% for used electric vehicles, incentivising people to consider a used electric car over a new petrol-powered one. In America, however, these incentives go even further – as part of its 2024 BEV Conquest Program, clients who trade in a non-BMW electric vehicle in favour of an electric BMW are eligible to receive $1000. BMW drivers in America can also receive two years’ worth of complimentary 30-minute charging sessions through their partnership with Electrify America.
Ultimately, though some car manufacturers are attempting to fill the gap that has been left through the reduction in government electric vehicle incentives with private offers, it is evident that this is not a strategy that has been adopted globally. Many car manufacturers seek to offer one-off incentives for specific electric car models or highlight to potential buyers how electric vehicles can save money on fuel costs rather than providing a variety of incentives of their own. However, as government incentives and subsidies for electric vehicle purchases continue to be reduced or removed, the electric vehicle market may stagnate and be prevented from growing further.
As a result, the question remains: As governments continue to phase out electric vehicle incentives, will car manufacturers be forced to adopt more private incentives, or is demand for electric vehicles significantly robust to avoid a shift back towards internal combustion vehicles?
